San Miguel Corp. Supervisors and Exempt Union v.

Laguesma
G.R. No. 110399 | August 15, 1997
Petitioners: San Miguel Corporation Supervisors And Exempt Union & Ernesto L. Ponce (President)
Respondent: Hon. Bienvenido E. Laguesma (DOLE Undersecretary), Hon. Danilo L. Reynante (Med-Arbiter) & San
Miguel Corporation
Ponente: J. Romero
Summary: SMC Supervisors and Exempt Union filed before DOLE a Petition for Certification Election among the
supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and
Otis. Med-Arbiter Reynante then ordered their conduct of certification as one bargaining unit. But San Miguel
appealed with DOLE contending that (1) the 3 separate plants should not be grouped into one bargaining unit, and
(2) supervisory levels 3 and 4 (S3 & S4) should be excluded because these positions are confidential in nature. After
2 Motion for Reconsiderations, Undersecretary Laguesma applied Philips Industrial Development, Inc. v. NLRC which
declared confidential employees ineligible from forming or joining a labor union. He ordered S3, S4 and the so-called
exempt employees to be excluded from those participating in the certification election, and directed the conduct of
separate certification elections in each of the 3 plants.
The SC held that S3, S4 and the exempt employees do not fall within the term confidential employees who may be
prohibited from joining a union. To be a confidential employee, 2 criteria must be met: he (1) assists or acts in a
confidential capacity, (2) to persons who formulate, determine, and effectuate management policies in the field of
labor relations. In other words, he must have necessary access to confidential information with respect to his
employers labor relations policies. In the case at bar, S3, S4 and the exempt employees handle confidential
information which relate to product formulation, product standards and product specification which concerns the
employers internal business operations and not to the field of labor relations. Moreover, SC held that the employees
of the 3 plants constitute an appropriate single bargaining unit for they have community or mutuality of interest,
performing work of the same nature and receiving the same wages and compensation although belonging to 3
different plants of the Magnolia Poultry Division of San Miguel.
FACTS:

San Miguel Corporation Supervisors and Exempt Union (SMC Union) filed before DOLE a Petition for
Certification Election among the supervisors and exempt employees of the SMC Magnolia Poultry Products
Plants of Cabuyao (Laguna), San Fernando (Pampanga) and Otis (Pandacan, Manila).
o Med-Arbiter Reynante issued an Order ordering their conduct of certification as one bargaining unit.

Appeal: San Miguel Corp. then filed with the DOLE a Notice of Appeal pointing out Med-Arbiters error in
grouping together all 3 separate plants into one bargaining unit, and in including supervisory levels 3 and 4
whose positions are confidential in nature.
o Undersecretary Laguesma: granted. Ordered the remand of the case to the Med-Arbiter for determination of
the true classification of each of the employees sought to be included in the appropriate bargaining unit.
st

1 MR: SMC Union filed a MR.

o Undersecretary Laguesma: granted. Directed the conduct of separate certification elections among the
supervisors ranked as supervisory levels 1 to 4 (S1 to S4) and the exempt employees in each of the 3
plants.
nd

2 MR: San Miguel Corp. filed a MR.

o Undersecretary Laguesma: granted.
o Applied Philips Industrial Development, Inc. v. NLRC Confidential employees, like managerial employees,
are not allowed to form, join or assist a labor union for purposes of collective bargaining.
o Applying in the case at bar, S3 and S4 and the so-called exempt employees are admittedly confidential
employees and therefore they are not allowed to form, join or assist a labor union for purposes of collective
bargaining. Thus, S3, S4 and the so-called exempt employees are excluded from those who could
participate in the certification election.

Hence this petition.

ISSUE 1: WON S3, S4 and the exempt employees of the company are considered confidential employees, hence
ineligible from joining a union. NO. [MAIN]
RATIO:

S3, S4 and the exempt employees are NOT vested with the powers and prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, layoff, recall, discharge or dismiss employees.
o They are therefore not qualified to be classified as managerial employees who under Art. 245 of the Labor
Code, are not eligible to join, assist or form any labor organization.
o Under the same Article, they are not allowed membership in a labor organization of the rank-and-file
employees BUT may join, assist or form separate labor organizations of their own.

The only question is whether they are confidential employees or not.

Confidential employees are those who (1) assist or act in a confidential capacity, (2) to persons who formulate,
determine, and effectuate management policies in the field of labor relations.
o The 2 criteria are cumulative, and both must be met. The confidential relationship must exist between the
employees and his supervisor, and the supervisor must handle the prescribed responsibilities relating to
labor relations.
o Thus, to determine WON a confidential employee, the question is: WON he has necessary access to
confidential information with respect to his employers relations policies. Access to information which
is regarded by the employer to be confidential from the business standpoint such as financial information or
technical trade secrets will not render an employee a confidential employee.
Rationale for exclusion from bargaining unit: These employees become aware of management policies relating
to labor relations in the normal course of their duties. Therefore, they should not be placed in a position involving
a potential conflict of interests.
o If these managerial employees would belong to or be affiliated with a Union, the latter might not be assured
of their loyalty to the Union in view of evident conflict of interest. The Union can also become companydominated with the presence of managerial employees in Union membership.
In the case at bar, S3, S4 and the exempt employees handle confidential data or documents which relate to
product formulation, product standards and product specification (e.g. decision to discontinue/temporarily stop
shift operations oversee the quality control function at the processing lines in the storage of chicken,
maintenance of sanitation and hygiene throughout the plant) which by no means relate to labor relations.
o The information they handle are properly classifiable as technical and internal business operations data
which has no relevance to negotiations and settlement of grievances wherein the interests of a union and
the management are invariably adversarial. Thus, they are not confidential employees and may
appropriately form a bargaining unit for purposes of collective bargaining.

SUB-ISSUE: If they are not confidential employees, do the employees of the 3 plants constitute an appropriate single
bargaining unit. YES.
RATIO:

The employees in the instant case have community or mutuality of interest. which is the standard in
determining the proper constituency of a collective bargaining unit.
o They all belong to the Magnolia Poultry Division of San Miguel Corporation. Although they belong to 3
different plants, they perform work of the same nature, receive the same wages and compensation, and
most importantly, share a common stake in concerted activities. The fact that the 3 plants are located in 3
different places is immaterial.

Moreover, separate bargaining units in the 3 different plants of the division will fragmentize the employees of the
said division, thus greatly diminishing their bargaining leverage. This will clearly frustrate the provisions of the
Labor Code and the mandate of the Constitution.
DECISION: WHEREFORE, the the assailed Order or Undersecretary Laguesma is hereby SET ASIDE and the Order
of the Med-Arbiter is REINSTATED under which a certification election among the supervisors (level 1 to 4) and
exempt employees of the San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and
Otis as one bargaining unit is ordered conducted.